Your Guide to Understanding the Affordable Care Act

By Anonymous

Your Guide to Understanding the Affordable Care Act

Health care reform has, in large part, defined Barack Obama's presidency. While a number of ideas for full-scale reform were on the table, the concept of universal health care created nearly unprecedented controversy. Detractors argued that universal health care would create a nationalized system with long lines for poor quality services, as well as a significant cost to taxpayers.

With the passage of H.R. 3590, the Patient Protection and Affordable Care Act, near-universal health care is a new reality. Although a package of "fixes" to the bill is currently making its way through Congress, the Act became the law of the land on March 23, 2010. It is therefore important to understand what the new Act is, and what it is not. I am intimately familiar with the Federal Employee Health Benefits (FEHB) plan, on which the new American Health Benefit Exchange program is based. My father is retired on disability from the Department of Defense and was able to carry his FEHB through into retirement. I was on his plan until I turned 19.

Beginning in 2014, you can buy into the American Health Benefit Exchange. Modeled after the FEHB, which provides insurance for federal workers including members of Congress, the Exchange is not a centralized, government-controlled plan.

Instead, it is a network of choices that are offered at lower cost due to the number of people enrolled. Each state will create its own Exchange. Each Exchange will offer a minimum of two multistate plans managed by the Office of Personnel Management (the governing body of the FEHB). You may select one of the OPM plans or any other plan in the Exchange.

Most states will provide Separate Exchanges for individuals and small businesses, although under certain conditions they may be merged.

Exchanges rotate on the concept of shared risk. You may already know that buying into group insurance is cheaper than buying individual insurance. This is because in any group of people, a certain number will become catastrophically ill. The more people in the group, however, the further those costs are spread. For example, if one person requires $1 million in care, his individual insurance would have to absorb all $1 million. If one million people are in the plan, however, that person's costs could be covered by a single dollar from each person. This shared risk allows each member of the group to pay a lower premium.

Just like federal employees already do, you will be able to choose from a wide variety of health care plans that meet your individual needs. HMOs, PPOs, fee-for-service plans and other options will all be available through private insurance companies. You can choose a plan with higher deductibles and co-pays but lower premiums, or a higher cost plan with lower per-incident fees. You can visit any doctor you like, including specialists.

The specifics will vary according to the plan you choose, but you will not be denied insurance, face higher premiums or be dropped from your plan due to pre-existing conditions, job changes or the onset of illness.

If your modified gross income is less than 400 percent of the federal poverty level for your family size, refundable tax credits will help pay your insurance premiums. Separate tax credit rules apply to small employers. In addition, your annual out-of-pocket requirements are reduced proportionately to your income level.

To illustrate, here is a real-life example of the FEHB in action.

My father enrolled in the program while he was working, and selected the high benefit plan through GEHA (Government Employees Hospital Association)/PPO-USA. He later developed several chronic illnesses including hepatitis C, diabetes and COPD. His premiums could not increase, nor could he be dropped from the plan, despite these chronic and expensive conditions. All of his doctor visits were covered according to the details of his plan.

My mother, covered on my father's insurance, also developed a series of chronic illnesses. Hers were not clear-cut, demonstrating a wide range of unusual symptoms that required repeated visits to specialists and a great deal of expensive testing. Her doctor visits and tests were also covered by the plan, and she could not be dropped or charged additional premiums.

Both of my parents had to retire on disability. As a retiring federal employee, Dad was able to keep their insurance. They moved from Florida to Louisiana and sought treatment for their illnesses. Thanks to the FEHB, doctors were able to aggressively treat their diseases, as there was no concern that a specific procedure might not be covered.

Their plan's prescription drug benefits proved invaluable, as Mom was prescribed over a dozen medications per day, including several new and expensive drugs. Specialty medications are covered at a slightly higher co-pay.

Premiums and plan specifics change annually (Dad's premium increased by four cents per month from 2008-2009), but the basic coverage remains the same. Despite his chronic illnesses, Dad is still eligible to change plans during the annual open season or whenever he experiences a life change (birth of a child, marriage or divorce, etc.). If he changes plans, he will pay the standard premium for the new plan and receive full benefits. He is not limited by his illnesses or retiree status.

The Patient Protection and Affordable Care Act supports mental health parity. This means that mental health conditions will be treated equally to physical illnesses. You will be able to get the mental health care that you need according to your provider's recommendations. Psychiatric medications must be covered under insurance companies' formularies. Of course, the precise benefits and out of pocket expenses will vary according to the plan that you select.

If you already have insurance, you will be able to keep it unchanged. The Act contains specific language preventing states or individual insurers from requiring anyone to join an Exchange or purchase a qualifying health plan. Beginning in 2014, you will be fined if you choose not to carry health insurance at all, but you can purchase any plan you want, from any company you choose.

Beginning in 2014, insurers will no longer be allowed to discriminate against anyone based on pre-existing conditions, including mental health disorders. Until then, those with pre-existing conditions are eligible for a new "high risk" pool. The new pool will go into effect 90 days after the bill was passed, making insurance available and affordable for those with pre-existing disorders.

H.R. 3590 also includes a number of additional reforms that are designed to bring down costs and improve quality. New standards of accountability for quality of care, modernization of record-keeping technology and measures to curtail the skyrocketing price of prescription drugs are just a few of the new reforms. The goal is to minimize bureaucratic inflation and red tape, streamline procedures and hold doctors accountable for the care that they provide. Medicaid will also be expanded to include childless adults under age 65 whose income is less than 133% of the poverty line.

Many of the Act's provisions, including the creation of Exchanges, will not take effect until 2014. However, numerous provisions will take effect by January 1, 2011. Examples include, but are not limited to:

It is generally best to maintain your current insurance coverage, if you have it, during the transitional process. Take a look at Managing Managed Care for tips on getting the phobia treatments you require under the current insurance system.